Nov. 9 (Bloomberg) -- Target Corp. spent two years
preparing to take control of its website from Amazon.com Inc.
and on the day of the debut included a link on the home page
titled “learn all about what’s new.” The link didn’t work.

The error, fixed later that day, proved to be a sign of
problems to come. The new Target.com has crashed six times since
it went live on Aug. 23, and accounted for more than half of the
major outages this year at the top 100 sites in the U.S. by
revenue, according to Web monitor AlertBot. The site’s president
left the company. Black Friday, the biggest shopping day of the
year, is also less than three weeks away.

“They could lose customers for this,” Robin Lewis, chief
executive officer of the Robin Report retail newsletter, said in
an interview. “Target is so on top of everything else they do
over there, and how they run their business. For this to be
happening is surprising.”

Like many brick-and-mortar retailers, Target has been
grappling for years with how to improve its Web operations as
shoppers migrate online. In the early days of the Web, companies
such as Target and Toys “R” Us Inc. found it easier and less
expensive to outsource their online operations to Amazon.

Target, the second-largest U.S. discount chain, partnered
with Amazon in 2001 and paid commissions into this year -- more
than $100 million a year, according to Colin Sebastian, a San
Francisco-based e-commerce analyst for Robert W. Baird & Co.

The chain, based in Minneapolis, decided to bring
Target.com in-house to improve the experience, eliminate the
commissions to Amazon and integrate it with Target’s more than
1,700 stores.

Outside Comfort Zone

That meant it had to go outside its comfort zone by hiring
developers and working with several partners to build a new site
from scratch that generated more than $1 billion in annual
sales.

Target’s problems aren’t unique and point to larger
obstacles within the industry to improving e-commerce, according
to Sucharita Mulpuru, an Internet analyst at Cambridge,
Massachusetts-based Forrester Research Inc. Retailers need to
have their own Web operations to compete with Amazon, and
attracting top technology workers and executives can be
difficult, she said.

“It’s really hard even in Silicon Valley to find IT
engineers,” Mulpuru said. “Retailers aren’t getting the
engineers from Facebook. This isn’t a-list development talent.”

Adding to the pressure on Target to make the transition to
running its own site is that several of its largest rivals,
including Wal-Mart Stores Inc. and Macy’s Inc., have already
made the move, according to Lewis, also a former retail
consultant for Goldman Sachs Group Inc.

Late to Game

“Target was a little late to the game in taking back
control,” he said. “It looks like they are learning on the
fly.”

Target rose 0.4 percent $53.05 at the close yesterday in
New York. The shares have fallen 12 percent this year.

In the press release announcing the debut of the revamped
site, Steve Eastman, president of Target.com, said the new
platform would create a “more user-friendly, reliable
experience.” So far, that hasn’t happened.

The first major sign that Target.com wasn’t ready came on
Sept. 13, three weeks after its launch, when the release of a
collection from Italian fashion house Missoni brought a rush of
visitors to the site that rivaled the traffic on Black Friday
and crashed it for most of the day.

Target.com President Leaves

A month later, on Oct. 13, the site went down again during
peak shopping hours. Later that day, Target announced in a one-sentence statement that Eastman left the company to “pursue
other opportunities.” Eastman joined Target in 1982, and was
head of merchandising for consumer electronics when he moved to
president of Target.com in June 2008. Target refused to comment
on the departure and Eastman could not be reached.

Since Eastman’s departure, the site has crashed four more
times, including once last week, and when it has been running
shoppers have complained about problems with checkout and gift
registries. Eastman’s position hasn’t been filled and the site’s
staff is reporting to Kathryn Tesija, executive vice president
of merchandising, Morgan O’Murray, a Target spokeswoman, said in
an e-mail.

“We have a team dedicated to addressing concerns, and are
working diligently to ensure that the site is operating
efficiently for the holiday season,” O’Murray said. The
retailer declined to provide specifics on its plans for the site
or make an executive available for an interview.

SapientNitro, a division of Boston-based Sapient Corp.,
served as lead partner on the re-launch of Target.com. It has
been working with Target to fix the site, said David LaBar, a
spokesman for Sapient.

Web’s Rising Influence

Target is trying to improve its website as shoppers this
holiday season plan to go online more than ever. About 82
percent will do some holiday shopping online this year,
according to the National Retail Federation. That means more
purchases are being influenced by the Web. Forrester estimates
that while 90 percent of buying still takes place in stores,
more than 40 percent is swayed by the Web.

The Web generates about 2 percent of Target’s almost $70
billion in annual sales, and many more purchases are influenced
by browsing on Target.com, the company has said. The fourth
quarter was also its most lucrative period last year, accounting
for 31 percent of its annual revenue.

“They’ve got to fix this,” said David Strasser, an
analyst for Janney Montgomery Scott in New York who has a
“neutral” rating on Target shares. The performance of its site
won’t make or break the holiday season for Target because its
stores matter more, and yet “if anybody’s Web site keeps
crashing, it will be bad for the holidays,” he said.

In any case, Sebastian of Baird says that, in the long run,
Target made the right move. “The complexity of building a
large-scale e-commerce site is really difficult,” he said.
“But, at the end of the day, Target made the right decision.
Amazon is a competitor, and you don’t want them controlling your
e-commerce business.”